11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Optimum Application of Geosciences in the Search for Hydrocarbon in Frontier Basins, Examples from Sudan Reservoir Facies Source Efficiency Trapping Integrity PLAY By Dr. Mohamed Zayed Awad NOT AN OFFICIAL UNCTAD RECORD

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Basement Rocks Cretaceous & Older Sequences Tertiary & Older sequences Basin Boundary Simplified Geological Map of Sudan Muglad Basin

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May 20073

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May 20074

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Opportunities Why has there been so much interest in onshore Sudan? Success & profitability  High success rates (69%)  Low Exploration Unit Finding Cost ($0.90/b) Improved infrastructure  More than 300-kilometer long pipelines from Heglig, Palogue & Fula to Bashyer Marine Terminal in the Red Sea.  Three refineries of 130,000 b/d capacity (to be expanded to 200k b/d) Contractual arrangements  Cost recovery & profit sharing basis (PSC)  Encouraging tax & custom exemption Sudan is providing areas with exciting opportunities for exploration companies of all sizes.

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Engagement of small indigenous companies with smaller capital allows them to partake in oil profits and minimize capital flight Localization of projects that facilitated knowledge and technology transfer, which were & remain crucial for better harnessing of local workforce and resources Nationalization program is focusing on improving the technical capability and competence levels of the local workforce (80% of two major op. co. nationalized within 5 yrs.) For the industry to be beneficial to the Sudanese people, the Government formulated policies to ensure localization of all petroleum projects ….. Developing local content Developing people for better resource management

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May PETROLEUM RESOURCE ASSESSMENT IN FRONTIER BASINS “DESPITE THE IMPRESSIVENESS OF FANCY ECONOMIC AND ENGINEERING ANALYSES, THE BIGGEST FACTOR IN THE POSSIBLE PAYOFF OF A PROSPECT OR A PLAY IS THE GEOLOGICAL, JUDGMENTAL ESTIMATION OF HYDROCARBON VOLUME AND RISK” -- David A. White (1993)

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Explorationists are not concerned about whether hydrocarbons are present or not in the prospect, rather they want to know the chance of finding a sufficient quantities of petroleum to warrant completion of the drilled well. They also think of “if a well is completed, how much profit will it generate?” Risk and Volumetric

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May  To quantify the unknown (uncertainty) Why Do Risk Analysis?: Prerequisites of Risk Analysis:  To forecast or predict events yet to come  To compare alternative investments  Before one goes into risk analysis, it is important to assess potential outcomes and their values.  Define investment opportunities (outcomes)  Seek expert opinion  Knowledge of principles of probability and statistics  Historical data or analogy

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Economic Analysis (Cash flow Model & Value Matrix, NPV, EV; Fiscal terms, Tax) Economic Analysis (Cash flow Model & Value Matrix, NPV, EV; Fiscal terms, Tax) DECISION Mean Resource Volume (=EV= Revenue) Mean Resource Volume (=EV= Revenue) Engineering Facility cost, Production profile, Recover Factor Engineering Facility cost, Production profile, Recover Factor Risk & Sensitivity Analysis Economic Assumptions Price Cost Escalation Inflation Exchange Rate Economic Results Economic Indicators Assessment of Geol. Elements  Source  reservoir  Trap/ Seal  Timing Assessment of Geol. Elements  Source  reservoir  Trap/ Seal  Timing EVALUATION PROCESS FLOW

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May HC Resource Assessment in Virgin Basins “Look-alike Approach” Comparison has to be made on basis of examination of the key factors that are favorable for the generation and accumulation of commercial quantities of hydrocarbon. Three main factors have to be considered in searching for analogy: 1.Tectonic evolution, basin geometry & size, 2.Sedimentation style and, 3.The Geothermal history These factors have control on the presence and effectiveness of the petroleum geological elements are processes

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Step-by-Step Resource Assessment in Virgin Basins “Look-alike Approach” STEP #1: Look for, and choose a mature basin that is comparable or similar to the virgin basin under investigation, STEP #2: Generate a frequency, and thereafter a filed size distribution diagram from the discovered fields in the mature basin, STEP #3: Work out the mean reserves from the field size distribution of the analogous mature basin (Muglad Basin) STEP #4: Use the “Prospect Size Distribution Table” to find out the expected mean HC resource from virgin basin under investigation,

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May EGYPT CENTRAL AFRICAN RIFT SYSTEM MUGLAD BASIN BLOCK 2A TALIH FIELD UNITY FIELD May-25 Bamboo Tayib Rihan Laloba Barki Hamra Kanga El Ghazal TOMA SOUTH El Nar (U6) El Saqr(U7) El Harr(U8) Kaikang-1 Kuoc Nor Nyang Amal-1 Jak RED SEA BLOCK 4 BLOCK 1A ELTOOR TOMAR Kaikang-2 HEGLIG FIELD Jidian FIELD Jamousse Sadeeq El Mahafir Amal Updip(K25) Umm Saqura (U14) Malok (K9) K5 El Majak Bamboo South NH12 El Toor N El Toor E Munga Cent. WU5 Khairat E KS1b (Tamur-1) Shammam-1 (Drilling) KN15 KN20 (Timsah-1) KN23 KN1

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May BASIN TECTONICS & PETROLEUM SYSTEM Rifting Cretaceous System Tertiary System Rift Cycles Sagging Rifting Sagging Rifting Sagging S R C T M

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Sedimentation Style

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Example of field size distribution of discovered reserves “Look-alike Approach” Typical lognormal distribution

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May P90 P1 P10 P50 P99 Muglad Basin Field Size Distribution Potential Reserves (MMBO) 0.1 P80 P70 Mean = 54 MMBO

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May The overall mean reserves from lognornmal distribution of the analog (Muglad Basin) is 5.4 X 10 million bbl, and our assessment minimum were 1.0 x 10, we could run down the “Mean” column of Table above until we hit the closest number to 5.4, which is The selected distribution would be ( – 20) X 10. Therefore the mean resource volume to be used for economic assessment & decision analysis would be 45 million bbl. Mean HC Resource Assessment in Virgin Basins “Look-alike Approach” Example of estimating future field size of the virgin basin under consideration using the Muglad Baisn as “ANALOG” X 10

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Economic Analysis (Cash flow Model & Value Matrix, NPV, EV; Fiscal terms, Tax) Economic Analysis (Cash flow Model & Value Matrix, NPV, EV; Fiscal terms, Tax) DECISION 45 MMBO Engineering Facility cost, Production profile, Recover Factor Engineering Facility cost, Production profile, Recover Factor Risk & Sensitivity Analysis Economic Assumptions Price Cost Escalation Inflation Exchange Rate Economic Results Economic Indicators Assessment of Geol. Elements  Source  reservoir  Trap/ Seal  Timing Assessment of Geol. Elements  Source  reservoir  Trap/ Seal  Timing EVALUATION PROCESS FLOW IN OIL & GAS PROJECTS

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May P90 P1 P10 P50 P99 Muglad Basin Field Size Distribution Potential Reserves (MMBO) 0.1 Small Fields Small Fields Medium Fields Medium Fields Large Fields Large Fields P80 P70

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Chance node (= nature dictates) Decision node (= decision maker dictates) Buy Acreage Don’t buy Small Field Medium Field Large Field No Commercial Discovery POS POF

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May لكم الشكر على حســـن الاستماع لكم الشكر على حســـن الاستماع

11 th African Oil & Gas Conference & Exhibition New Frontiers of Exploration Activity May Reservoir Facies Source Efficiency Trapping Integrity PLAY SOURCE Is there oil in the basin? SOURCE Is there oil in the basin? TRAP/ SEAL Is there a place to collect it? TRAP/ SEAL Is there a place to collect it? RESERVOIR Porous rock that can hold? RESERVOIR Porous rock that can hold? TIMING Trap formation vs. Generation? TIMING Trap formation vs. Generation? PLAY CONCEPT Probability of Success Probability of Success